Life Policy ProvisionsQuestion 169 of 716
A spendthrift clause attached to a life insurance settlement is designed primarily to do which of the following?
a.Require a probate court's order approving the settlement before any of the proceeds are released to the beneficiary
b.Increase the rate of interest the insurer credits, under the interest option, on proceeds the beneficiary leaves on deposit
c.Protect the proceeds from claims of the beneficiary's creditors and from the beneficiary's own assignment
d.Allow the beneficiary to withdraw, assign, or pledge the entire remaining balance at any time and in any amount, without limit
Explanation
A spendthrift clause restricts the beneficiary's ability to anticipate, assign, or otherwise transfer future installment payments. It also shields those future payments from most creditors, helping protect a beneficiary who may be financially unsophisticated.
Law Reference: Cal. Ins. Code §10130.5This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)